Lawrence Tribe on the Clean Power Plan

Lawrence Tribe has an interesting op-ed in today's Wall Street Journal. He argues that the plans the EPA has to regulate power plants in the states is unconstitutional.  While he agrees with the desire to limit carbon emissions, he says this approach is unconstitutional.

Interesting Pieces in Today's WSJ

Several interesting pieces in today's Wall Street Journal.  John Taylor on monetary policy and the next crisis is quite good.  He doesn't say so, but it strikes me that if price controls distort, continued low interest rates must also distort.  On a different note, Stephen Moore writes about lessons regarding energy policy from the power outage in his neigborhood.  He argues that as we pursue green energy and actively disourage coal and natural gas, we can expect such outages on a regular basis.  Austan Goolsbee writes about the impact of the Supreme Court decision on Obamacare, claiming there wasn't one. He argues that this shows that the slow recovery is not due to business fears over regulation. If so, markets would have dropped and they did not.  This relies on the belief that the markets had not anticipated the Supreme Court's decision though.  He offers some other interesting empirical tests though.
Finally, a news article that got a lot of attention on Squawk Box this morning--some cities are considering using eminent domain to seize mortgages from banks, write down the amount so the owners can stay in their homes.  To do so, they would have to compensate the holders of the mortgages, but the plan would be to pay them the "market value" of the mortgage rather than the contracted amount.  There has been a widening of the power of eminent domain to take property even when it is not to be used by the government.  I find this very disconcerting.  It strikes me as a weakening of the rule of law--one of the key ingredients for an economy to be successful

Energy in Germany

There are two interesting articles in today's business section of the German newspaper, DIE WELT. One concerns the high price of gasoline and that the antitrust division (Bundeskartellamt) is looking into collusion among the top five firms in Germany. The price of a liter of gasoline is 1.62 euros. With an exchange rate of a little more than $1.40 per euro and with 3.785 liters per gallon, it works out to $8.60 a gallon. Now, this is for premium and not regular. According to the article, this is the highest price ever in Germany.

The second article concerns a warning from electric utility firms that there may be blackouts in southern Germany this winter. The winter is prime time for electricity for a variety of reasons--short hours of daylight, cold weather, and southern Germany is highly industrialized so large demand from industry. Why this winter? After the problems with the nuclear power plant in Japan, Germany has put its older nuclear plants off line and are giving stress tests of some kind on others. The utility companies are saying that too much capacity will be off line if all this happens, and blackouts could result. An option that some think is possible is to import electricty from France, but France is a net importer in the winter.

Representatives of the Green Party dismiss the concerns. One represtative said that there are no bottlenecks and another that it is their view that there is not a problem. The article also reports that Alcoa has recently announed that they will not expand production facilities in Germany because they consider Germany's energy policy to be too risky.

Power Hungry

I just finished an excellent book on energy--POWER HUNGRY by Robert Bryce. The subtitle of the book is "The Myths of 'Green' Energy and the Real Fuels of the Future. His basic argument is that the popular "green" energies--wind and solar--can never replace hydrocarbons as the major source of power in the world. He notes that it is not energy that we want, but power. As he notes, "Energy is the ability to do work; power is the rate at which work gets done." (p. 13). It's power we want and we want it 24/7. He continues, "Renewable energy has little value unless it becomes renewable power, meaning power that can be dispatched at specific times of our choosing." (p. 39).

Bryce focuses on what he calls the Four Imperatives. These are: power density, energy density, cost, and scale. The renewables fail on these imperatives.

He also has some good one-liners:

"If you are anti-carbon dioxide and anti-nuclear, your are pro-blackout."

"All-electric cars are The Next Big Thing. And they always will be."

As Bruce says repeatedly, it is a matter of math and physics. He sees the solution to more use of natural gas and nuclear power.

The book can help clear the air of hype and sensationalism, which are often invoked by environemental activists.

Daylight Savings Time

I live in West Michigan, which is the western edge of the Eastern Time Zone. Summers are great, with it being light until about 10:00. But, with the earlier move to daylight savings, its been dark in the morning. My wife has often asked whether daylight savings actually saves energy. A recent study by an economist says no--daylight savings causes an increase in electricity usage. For many years, part of Indiana went to daylight saving time and part did not, so there was a natural experiment when the rest of Indiana went to daylight saving time. The result--greater electricity usage in the counties after they went to daylight saving. The counties that had been using daylight saving for some time were the control group. I understand it was Ben Franklin's idea originally, so even Ben could be wrong.

Obama, DIrigisme and Energy Policy

The new CAFE standards announced by President Obama have generated an interesting article in Financial Times by John Gapper. He notes that the CAFE standards killed large cars in America but helped create the SUV. Unintended consequences once again. He makes the case economists often make that a more efficient way to reduce oil consumption is to tax it--in this case, by a large, European-style gas tax. Gapper writes:

"Instead of the simplest, most obvious and least expensive way of achieving that end – raising the national excise tax on petrol – the president was again relying on a complex, dirigiste intervention."

It is likely, as Gapper notes, that Congress would never pass such a tax. It certainly wouldn't be popular among taxpayers and voters. But, given Obama's popularity, why not tackle something difficult instead of easy things like increased spending, something most politicians and voters like. I am getting the sense that the new administration prefers dirigistic approaches since such approaches rely on the wisdom of the regulators rather than relying on people responding to market forces.